PERTINENT HISTORY: Prior to the 1977 amendments, the law provided
"delayed retirement credits" for individuals who would become entitled to
a retirement insurance benefit (RIB) no earlier than the month of
attainment of age 65 (or, if entitled earlier, where no payments were made
for such earlier months). Where an insured worked became entitled to an
RIB in or after the month he or she attained age 65, or after becoming
entitled at age 65 failed to receive any benefit for 1 or more months
after that age because of work deductions, the worker would receive
credits. These delayed retirement credits would increase the worker's
primary insurance amount (PIA) by 1/12 of 1 percent per month (1 percent
per year) for each such month of nonpayment of benefits prior to
attainment of age 72. This "credit," however, was only used to increase
RIB payments. After the worker's death, the amount of benefits payable to
widows and widowers was always based on the wage earner's PIA without
including any retirement credits to which the worker was entitled.

In enacting the 1977 amendments, Congress intended to avoid weakening
incentives for workers to remain in or return to the labor force by
increasing the delayed retirement credits available. With wage indexing of
earnings records, earnings after 65 do not increase benefits as much as
they did before indexing and therefore an increase in the delayed
retirement credit was warranted to accomplish the desired result. In
addition, the Congress wished to have the widow's or widower's benefit
include the delayed retirement credits that the worker had earned before
his death.

POLICY STATEMENT: The following policies apply to eligibility for,
and the use and amount of, delayed retirement credits:

1. Beneficiaries Who Attain Age 62 Before 1979

In addition to individuals entitled to delayed retirement credits under
preamendment law, beneficiaries who become eligible for a reduced
retirement benefit before January 1979 can be eligible for delayed
retirement credits in the amount of 1/12 of 1 percent per month for any
month in which they ware age 65 and did not receive a monthly benefit. The
former bar to the payment of delayed retirement credits to those workers
claiming reduced benefits has now been removed. Delayed retirement credits
for months before 1979, which ware not payable under prior law, are
payable effective January 1979.

2. Beneficiaries Who Attain Age 62 After 1978

Wage earners who attain age 62 after 1978 (i.e., in 1979 or later) can
receive increased delayed retirement credits of 1/4 percent per month (up
to 3 percent per year). Since these individuals will attain age 65 after
1981, the first year in which they can earn delayed retirement credits at
the higher rate is 1982, with the increase in benefits payable in
1983.

3. Two Rates of Delayed Retirement Credits Payable After 1982

a. Wage earners who attain age 62 after 1978 (born after January 1,
1917), and whose benefits are computed under the wage indexed system (or
the 5-year transitional guarantee), will earn delayed retirement credits
of ¬ percent per month (up to 3 percent per year).

b. Wage earners who attain age 62 before 1979 (born before January 2,
1917), and whose benefits were computed under pre-1977 amendment methods,
will earn delayed retirement credits of 1/12 percent per month (up to 1
percent per year).

4. Use of Delayed Retirement Credits in Computing Widows' and
Widowers' Benefits

The worker's PIA, increased by any delayed retirement credits accrued
prior to the death of the insured individual, is deemed to be the PIA on
which the widow's or widower's benefit is based. Payments based on PIA's
increased by these credits are effective for all widows' and widowers'
benefits for months after May 1978. For example: A wage earner died in
January 1978, the month he attained age 66. He had been in work deductions
since age 65. For January 1978, the widow's benefit rate, before reduction
for age, is equal to the deceased worker's PIA (without including delayed
retirement credits). Effective June 1978, the widow's benefit, before
reduction for age, will be increased to equal the PIA plus the 12 monthly
delayed retirement credits which the worker had earned before his
death.

FURTHER INFORMATION: Final regulations covering these policies were
published in the Federal Register on July 7, 1978, at 43 FR 29275.